HK-listed firm keen to buy “illiquid” SG-listed SMB United at $0.32 per share

The offer according to the acquiring firm Boer Power is competitively priced compared to the current valuations of French power giant Schneider.

“Basically the offer is very fair. The current marketing condition is very negative and Boer is not taking advantage of that to offer a reduced price. We are also taking consideration of global leading players in the same industry such as Schneider .The $0.32 per share offer implies a price-to-earnings (PE) ratio of 11.5x while Schneider currently trades at 10.9x PE according to data released on Bloomberg. This despite the fact that Schneider has a much larger base of operations compared to SMB United, offering a full range of services,” Boer Power chairman and CEO Qian Yixiang.told Singapore Business Review.

In a separate interview, Boer Power’s financial advisor PrimePartners director Mah How Soon reiterated that the offer is attractive saying that when evaluated against the historical trading shares of SMB, the offer represents a premium of approximately 16% over the last transacted price per share, 17% over the last one month, 21% over the last three months and 28% over the last twelve months prior to the last trading day before the Offer Announcement.

Mr. Mah also noted that the offer is even fair enough for a stock that is basically ‘illiquid’.” “SMB’s daily trading liquidity is just less than 1% of the free float and the total share capital of SMB over the last 12 months. In fact, SMB United shares only closed above the Offer Price of $0.32 on 53 trading days over the last 5 years,” he said.

Boer according to Mr. Mah intends to acquire to 100% of shares SMB. In the event that Boer gets more than 90% shareholding interests including the acceptance, Boer will exercise its right of compulsory acquisition. Mr. Qian however notes that if the acquisition was successful, subject to a comprehensive review of the organization, business and operations of SMB, there are currently no plans to impose major changes in the management or cut down the number of employees.

“We envisage no significant change in the business and management as Boer recognizes the management and employees of SMB,” said Mr. Qian.

For this offer to shareholders of SMB, Mr. Mah said that Boer wants to achieve the following strategies

• To expand channel overseas by tapping SMB’s channels in Europe, China and the rest of
• Asia.
• To increase product offering as Boer and SMB are basically in the same industry and they have complementary products.
• To improve operational efficiency and other improvement measures.
• To attract talents as the acquisition will bring Boer and SMB in a better position to attract talents.

Boer dispatched the offer on Nov. 21 and is open for acceptances and closes at 5:30 p.m. (Singapore time) on 19 December 2011 or such later date(s) as may be announced.